Exam 2: Introduction to Financial Statement Analysis

Balance Sheet Assets Liabilities Current Assets Cash 50 Accounts receivable 22 Inventories 17 Total current assets 89 Current Liabilities Accounts payable 42 Notes pavable/short-term debt 7 Total current liabilities 49 Long-Term Assets Net property, plant, and equipment 121 Total long-term assets 121 Total Assets 210 Long-Term Liabilities Long-term debt 128 Total long-term liabilities 128 Total Liabilities Shareholders' Equity 33 Total Liabilities and 210 Shareholders' Equity -A 30-year mortgage loan is a

What is the main reason that it is necessary for public companies to follow the rules and format set out in the Generally Accepted Accounting Principles (GAAP) when creating financial statements?

Which of the following is the main lesson that analysts and investors should take from the cases of Enron and HIH?

A delivery company is creating a balance sheet. Which of the following would most likely be considered a short-term liability on this balance sheet?

A small company has current assets of $112,000 and current liabilities of $117,000. Which of the following statements about that company are most likely to be true?

What is the role of an auditor in financial statement analysis?

Price-earnings ratios tend to be high for fast-growing firms.

The managements of public companies are not legally required to disclose any off balance sheet transactions.

A manufacturer of plastic bottles for the medical trade purchases a new compression blow moulder for its bottle production plant. How will the cost to the company of this piece of equipment be recorded?

Use of the A-IFRS and auditors has eliminated the danger of inadvertent or deliberate fraud in financial statements.

International Financial Reporting Standards are taking root throughout the world. However, it is unlikely that Australia will report according to IFRS before the second half of the twenty-first century.

Use the table for the question(s) below Balance Sheet Assets Liabilities Current Assets Cash 50 Accounts receivable 22 Inventories 17 Total current assets 89 Current Liabilities Accounts payable 42 Notes pavable/short-term debt 7 Total current liabilities 49 Long-Term Assets Net property, plant, and equipment 121 Total long-term assets 121 Total Assets 210 Long-Term Liabilities Long-term debt 128 Total long-term liabilities 128 Total Liabilities Shareholders' Equity 33 Total Liabilities and 210 Shareholders' Equity -The above diagram shows a balance sheet for a certain company. If the company pays back all of its accounts payable today using cash, what will its net working capital be?